Ias 38 – 2021 Issued ifrs standards (Part A)

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IAS 38
A1508
© IFRS Foundation

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(b)
typical product life cycles for the asset and public information on
estimates of useful lives of similar assets that are used in a similar way;
(c)
technical, technological, commercial or other types of obsolescence;
(d)
the stability of the industry in which the asset operates and changes in
the market demand for the products or services output from the asset;
(e)
expected actions by competitors or potential competitors;
(f)
the level of maintenance expenditure required to obtain the expected
future economic benefits from the asset and the entity’s ability and
intention to reach such a level;
(g)
the period of control over the asset and legal or similar limits on the
use of the asset, such as the expiry dates of related leases; and
(h)
whether the useful life of the asset is dependent on the useful life of
other assets of the entity.
The term ‘indefinite’ does not mean ‘infinite’. The useful life of an intangible
asset reflects only that level of future maintenance expenditure required to
maintain the asset at its standard of performance assessed at the time of
estimating the asset’s useful life, and the entity’s ability and intention to
reach such a level. A conclusion that the useful life of an intangible asset is
indefinite should not depend on planned future expenditure in excess of that
required to maintain the asset at that standard of performance.
Given the history of rapid changes in technology, computer software and
many other intangible assets are susceptible to technological obsolescence.
Therefore, it will often be the case that their useful life is short. Expected
future reductions in the selling price of an item that was produced using an
intangible asset could indicate the expectation of technological or commercial
obsolescence of the asset, which, in turn, might reflect a reduction of the
future economic benefits embodied in the asset.
The useful life of an intangible asset may be very long or even indefinite.
Uncertainty justifies estimating the useful life of an intangible asset on a
prudent basis, but it does not justify choosing a life that is unrealistically
short.